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What does IMF data say about Australia’s spending and net debt?

the International Monetary Fund (IMF) warns that, without policy change, Australia would record the fastest spending growth of the top 17 surveyed advanced economies and the third largest increase in net debt as a share of the economy.

These claims were based on charts published on page 24 of the IMF’s Article IV Consultation—Staff Report for Australia, which was released in February 2014. One of the IMF’s charts appeared to show that Australia had the highest forecast change in real expenditure between 2012 and 2018 amongst all IMF advanced economies. Another chart appeared to show that Australia had the third highest forecast change in net debt as a percentage of GDP between 2012 and 2018 amongst all IMF advanced economies.

In its World Economic Outlook (WEO) database, the IMF releases economic data and forecasts for IMF member counties, including the 36 advanced economies. The latest release is the April 2014 WEO, which is later than the IMF’s Article IV report, but which predates the 2014-15 Budget.

Using the April 2014 WEO database to calculate all advanced economies’ forecast change in real expenditure between 2012 and 2018 provides the following results:

While Australia’s forecast real change in expenditure is higher than the average for advanced economies, the claim that it is the fastest amongst all IMF advanced economies is incorrect. The relevant chart in the IMF’s Article IV report, however, tends to suggest otherwise as it omits the following countries, all of which have a higher rate of growth than Australia: Hong Kong SAR, Luxembourg, Estonia, Norway, Israel, and Singapore.

Likewise, using the April 2014 WEO database to calculate all advanced economies’ forecast change in net debt as a percentage of GDP between 2012 and 2018 provides the following results:

On this measure, Australia is forecast to have higher growth in net debt as a percentage of GDP between 2012 and 2018 than the average for IMF advanced economies. Again, however, the relevant chart in the IMF’s Article IV report may not provide the true picture, as Japan, Finland and Spain are omitted. The April 2014 WEO database shows that these three countries have a higher forecasted growth in net debt as a percentage of GDP than Australia.

In the IMF’s report, the choice of 17 countries is not consistent between the two charts in question, with the Czech Republic, Finland, Great Britain, Greece, Iceland, Ireland, Japan, and Portugal appearing on one chart but not the other. Some IMF advanced economies, such as Spain, are not depicted at all.

definitely switching between different subsets is not something that we would encourage people to do.

To the extent that the Government and commentators rely upon what is stated in the IMF’s Article IV report, they are not inaccurate. However, the IMF’s Article IV report may not actually be saying what some people presume it does.